Corp.s top executives are keeping the expected direction
of May ferrous scrap prices close to the vest.
"I can make a case it is going
to go down in May and I can make a case it is going to go up in
May," Russ Rinn, president and chief operating officer of the
Steel Dynamics Inc. recycling subsidiary, told investors during
a conference call to discuss SDIs first-quarter financial
OmniSources top brass also
declined to comment on whether the Fort Wayne, Ind.-based
company has been able to procure scrap at prices below April
scrap market settlement levels.
The companys guarded
responses about the ferrous scrap markets direction come
at a time when SDI is keenly aware of the impact that market
forecasting has on its order books, SDI president and chief
executive officer Mark D. Millett said.
Whenever customers sense a
downtick in scrap prices, the companys steel order book
dries up; and whenever customers sense an uptick, SDI is
inundated with orders, as was the case in March, he said.
"The customer is so watchful of
raw material input costs, and that is driving volatility,"
Millett said. "The procurement mentality will continue to drive
Rinn did indicate that scrap
inventory levels throughout the system are tight and even small
fluctuations in run rates can impact the direction of the
For the first quarter ended
March 31, SDIs metals recycling segment was able to keep
its operating income largely flat despite fewer shipments and
The segment posted operating
income of $24.97 million for the quarter, down 0.2 percent from
a little more than $25 million a year earlier, on sales that
fell 21 percent to about $835 million from $1.06 billion in the
Sequentially, the segments
operating income fell 3.3 percent from $25.82 million "as
increased volumes were more than offset by decreased ferrous
and nonferrous margins," Millett said in a statement. "Due to
ongoing slow U.S. growth and inclement weather, the
availability of unprocessed scrap was limited, particularly in
the Midwest and along the northeastern corridor, resulting in
increased costs to purchase unprocessed material."
Ferrous shipments totaled 1.34
million tons, down 15.2 percent from 1.58 million tons in the
year-ago period. Average ferrous scrap selling prices were $351
per ton in the quarter, down 15.8 percent from $417 per ton in
the year-ago quarter. Nonferrous shipments totaled 279.6
million pounds, down 4.1 percent from 291.6 million pounds in
the first quarter of 2012.
Including its ferrous resources
division, however, the results were less stable. SDIs
combined metals recycling and ferrous resources unitwhich
includes OmniSource, a liquid pig iron production facility and
the companys Minnesota iron-producing
operationslogged an operating loss of $4.3 million vs. a
gain of nearly $10.4 million in the same period last year.